Nikola's Stock Struggle: 99% Plunge and Competitor Challenges

Nikola's stock has fallen nearly 99% in three years, with substantial losses and revenue issues, as discussed in a recent report. It faces fierce competition from industry giants, raising significant concerns for investors about its future performance.

Date: 20-09-2024

AI Rating: 4

Nikola (NASDAQ: NKLA) has faced a significant decline in its stock value, plunging almost 99% over the last three years. This drastic drop follows a period of overambitious goals that were not met, particularly regarding production forecasts. In 2021, Nikola aimed to ship 600 battery-powered electric trucks (BEVs), but it failed to ship even one. The company's actual performance included only 131 BEVs in 2022 and 79 in 2023, resulting in minimal revenue generation.

According to the report, Nikola's revenue figures for the last three years illustrate a troubling trend: $0 in 2021, $50.8 million in 2022, and $35.8 million in 2023. Its net income has also deteriorated, posting net losses of ($690.4 million), ($784.2 million), and ($966.3 million) over the same period. These figures paint a bleak picture of Nikola's financial health as it continues to incur significant losses.

While Nikola has managed a slight rebound in terms of sales with an increase in FCEV deliveries, the growth is overshadowed by ongoing losses and substantial competition from larger players like Daimler Truck and Tesla. Analysts forecast an improvement in revenue, estimating it to rise to $133.5 million for the full year, which is an encouraging sign; however, the adjusted EBITDA margins remain significantly negative, indicating ongoing financial distress.

Nikola is attempting to focus on hydrogen-powered FCEVs, which, while having advantages, pose considerable operational challenges and financial burdens. With a projected cash reserve of $256.3 million against total liabilities of $586.4 million, the company may require additional funding through debt or further share dilution, raising concerns about its future viability.

Investor confidence looks shaky given the history of strategic changes and leadership issues. The departure of its founder and multiple leadership changes may also affect investor sentiment negatively. Therefore, while Nikola's future could improve if they successfully implement their business plan, significant obstacles remain that could impact stock performance adversely in the coming years.

Stocks: NKLA